Indiabulls Multi Cap Fund NFO – Should you invest?

Indiabulls Multi Cap Fund NFO has opened for subscription on 4th March, 2020. Many experts believe that instead of investing in just large cap fund or midcap fund or small cap fund, one should invest in multicap fund that would work like diversification in the portfolio. In this article we would detail about Indiabulls Multi Cap Fund NFO Scheme details, reasons to invest and risk factors thereon. We would also review how top multicap mutual funds are performing now that can give idea to you whether to invest in such multicap funds or not.

As the name indicates, the multicap mutual fund invests across various market capitalization stocks. In simple terms, these funds invest in large cap, midcap and smallcap stocks and do not restrict specific market capitalization.

Indiabulls Multi Cap Fund NFO Issue Details

This is an open-ended mutual fund equity scheme.

This scheme would open for subscription on 4th March, 2020.

This scheme would close for subscription on 18th March, 2020.

Since this is an open ended scheme, it would again open for subscription after 5 business days from the date of allotment of MF units after the NFO period.

This scheme is available in both regular and direct plans.

This plan offers both growth option and dividend option.

This scheme is available for lump sum and SIP investment.

Minimum investment is Rs 500 and in multiples of Rs 1 there-off for lump sum investments.

Minimum investment is Rs 500 per month for monthly SIP and for a tenure of 12 months.

The NAV of the NFO is Rs 10 per unit now during initial subscription.

There is no entry load to invest in this mutual fund scheme.

There is no exit load in this scheme.

This scheme is classified as moderately high risk mutual fund scheme.

Scheme total expense ratio (TER) is estimated at a maximum of 2.25% of the total assets on any day.

What is the investment objective and strategy of this Indiabulls Multi Cap Fund NFO?

Indiabulls Multi cap Fund aims to generate medium to long term capital growth by investing in a diversified portfolio consisting of equity and equity related instruments across market capitalization.

What is the allocation pattern in this mutual fund scheme?

This fund investment pattern is as follows:

1) It invests 65% to 100% in equity and equity related Instruments of largecap, midcap and smallcap companies based on below allocations. The risk profile in this segment is high.

a) 50% to 100% – Largecap companies

b) 0% to 30% – Midcap companies

c) 0% to 20% – small cap companies

3) It would invest 0% to 35% in debt and money market instruments. The risk profile in this segment is low to medium.

Can NRI invest in this MF scheme?

Yes, they can invest in this scheme. They can invest on repatriation or non repatriation basis.

Why should you invest in such Multicap Funds

Here are a few reasons to invest in such schemes.

1) Multicap Funds invests in large cap, midcap and smallcap segments, hence it reduces risk to some extent since it does not invest 100% in a single segment like midcap or small cap.

2) Such schemes work like diversification of portfolio. If midcap or a small cap segment does not perform well (which we have seen in the last 2 years), such schemes might invest in large cap. This way your fund might give moderate returns even in such cases.

Some risk factors you should consider before investing in such funds

One should consider some of these risk factors / negative factors before investing.

1) This scheme invests in debt portion up to 35%. These days, investment in debt instruments has also become high risk due to downgrade of corporate credit ratings and default on payments by corporates.

2) This scheme invests in midcap or small-cap stocks which are high risk.

3) Investors should not assume any guaranteed returns from such funds.

4) Since it is a new mutual fund scheme, there is no past performance, hence we would not know, how the fund would perform in the future.

5) Read carefully about all risk factors indicated in the scheme related documents.

How is the Performance of existing Multicap Funds?

Currently there are existing multicap mutual fund schemes. Let us see how some of these funds have performed in the last 5-10 years.

Should you invest in the Indiabulls Multi Cap Fund NFO?

This mutual fund scheme invests in large cap, midcap and smallcap segments. However, since this is a relatively new fund, one cannot assess how such funds would perform in the medium to long term. If you want to test such new funds, you can invest. Otherwise, you can invest in some of the top performing multicap mutual fund schemes which we recommended earlier.

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I have done my Post Graduation in Finance. I have over 20 years of experience in analyzing various investment options and money saving ideas. I love doing financial planning, Mutual Fund Analysis, Searching long term Stocks for wealth creation, IPO Reviews, Analyzing Life Insurance and Health insurance Plans etc.